Table Of ContentThe debate about the expansion of the regional integration of Europe is set to
dominate the European Union's (EU's) policy agenda in the coming years. While
the countries of Central and Eastern Europe may aspire to EU membership only
in the longer term, Austria, Finland and Sweden have all recently achieved
membership status. This volume, derived from the proceedings of a conference
run jointly by the Centre for Economic Policy Research and the Yrjo Jahnsson
Foundation, examines the discussion surrounding both actual and possible future
expansion of the EU. The contributors address the key issues in the debate,
including: the implications of expansion of the EU for the global trading system;
the pressure any imminent expansion might put on the EU to reform its political
and decision making processes; the theoretical motivation behind the clamour for
entry to the EU; the economic consequences of membership for new entrants;
and the effect on the location of economic activity and on migration in a larger
EU. Using new trade theory, game theory, empirical assessment and simulation
to report new results and insights, the contributors not only shed light on the
consequences of Austria, Finland and Sweden joining the EU, but also discuss
and evaluate the possible membership of Central European ex-socialist countries.
This is an important book not only for students and scholars interested in
regional integration, but also for policy-makers in the new EU member countries
and in applicant countries. Many of the issues addressed in this volume will be
relevant for the EU's inter-governmental conference in 1996.
Expanding membership of the European Union
Yrjo Jahnsson Foundation
The purpose of the Foundation is to promote Finnish research in economics and
medical science and to support Finnish institutions of research and education.
The Foundation supports scientific research by financing research projects and
the work of individual scholars, as well as by giving scholarships for graduate
studies, both in Finland and abroad. In addition, the Foundation organises
workshops, lectures and symposia on topics considered to be important. The
Yrjo Jahnsson Foundation was established in 1954.
In the field of economics, the Yrjo Jahnsson Foundation is clearly the most
important source of private research funding in Finland. In 1963 the Foundation
started the series of Yr jo Jahnsson Lectures, given biannually by distinguished
economists. Four of the contributors to the Jahnsson Lectures later received the
Nobel Prize in Economics: Kenneth Arrow, Lawrence Klein, Sir John Hicks and
James Tobin. The lectures have also been published and distributed internation
ally. Since the late 1980s, the Yrjo Jahnsson Foundation has placed more
emphasis on European integration as a challenge to research, and in 1991 a
lecture series on integration issues was launched. These lectures have also been
published. In 1992, the Board of the Foundation decided to establish a European
prize called the 'Yrjo Jahnsson Award in Economics', to be awarded biannually
to a distinguished young economist.
In medical science, the Foundation aims to focus its support on a few well
defined fields of research. Priority is given to research projects in preventative
medicine, which may also have economic importance.
The Board
Jaakko Honko (Chairman)
Timo Laatunen (Vice-chairman)
Veikko Kallio
Pentti Talonen
Pentti Vartia
Scientific Committee
Jaakko Honko Marianne Stenius
Veikko Kallio Antti Tanskanen
Mikko Salaspuro Pentti Vartia
Officers
Arto Alho Managing Director
Mika Widgren Research Director
Centre for Economic Policy Research
The Centre for Economic Policy Research is a network of over 250 Research
Fellows, based primarily in European universities. The Centre coordinates its
Fellows' research activities and communicates their results to the public and
private sectors. CEPR is an entrepreneur, developing research initiatives with the
producers, consumers and sponsors of research. Established in 1983, CEPR is a
European economics research organisation with uniquely wide-ranging scope and
activities.
CEPR is a registered educational charity. Institutional (core) finance for the
Centre is provided through major grants from the Economic and Social Research
Council, under which an ESRC Resource Centre operates within CEPR; the
Esmee Fairbairn Charitable Trust; the Bank of England; 15 other central banks
and 30 companies. None of these organisations gives prior review to the Centre's
publications, nor do they necessarily endorse the views expressed therein.
The Centre is pluralist and non-partisan, bringing economic research to bear on
the analysis of medium- and long-run policy questions. CEPR research may
include views on policy, but the Executive Committee of the Centre does not give
prior review to its publications, and the Centre takes no institutional policy
positions. The opinions expressed in this volume are those of the authors and not
those of the Centre for Economic Policy Research.
Executive Committee
Chairman Anthony Loehnis
Vice-Chairman Guillermo de la Dehesa
Honor Chapman Peter Middleton
Sheila Drew Smith David Miliband
Jacob A Frenkel Mario Sarcinelli
Otmar Issing Alasdair Smith
Mervyn King Catherine Sweet
Philippe Lagayette
Officers
Director Richard Portes
Deputy Director Stephen Yeo
1March1995
Expanding membership of
the European Union
Edited by
RICHARD BALDWIN
PERTTIHAAPARANTA
and
JAAKKO KIANDER
"'"�""'
CAMBRIDGE
::: UNIVERSITY PRESS
CAMBRIDGE UNIVERSITY PRESS
Cambridge, New York, Melbourne, Madrid, Cape Town, Singapore, Silo Paulo
Cambridge University Press
The Edinburgh Building, Cambridge CB2 8RU, UK
Published in the United States of America by Cambridge University Press, New York
www.cambridge.org
Information on this title: www.cambridge.org/9780521481342
Cambridge University Press 1995
©
This publication is in copyright. Subject to statutory exception
and to the provisions of relevant collective licensing agreements,
no reproduction of any part may take place without the written
permission of Cambridge University Press.
First published 1995
This digitally printed version 2008
catalogue record for this publication is available from the British Library
A
Library of Congress Cataloguing in Publication data
Expanding membership of the European Union edited by Richard Baldwin,
I
Pertti Haaparanta, and Jaakko Klander.
p. cm.
Proceedings ofa conference held in Sannlis, Finland, in May 1993,
organized jointly by the Centre for Economic Policy Research and
the Yrjo Jahnsson Foundation.
Includes index.
ISBN 0 521 48134 l
l. European Union -Congresses.
2. European federation -Congresses.
3. Europe -Economic integration -Congresses.
I. Baldwin, Richard. II. Haaparanta, Pertti. III. Kiander, Jaakko.
IV. Centre for Economic Policy Research (Great Britain).
V. Yrjo Jahnssonin slUltio.
JN30.E96 1995
34l.24'2-dc20 95-9286 CIP
ISBN 978-0-521-48134-2 hardback
ISBN 978-0-521-05785-1 paperback
Contents
List of figures page xiii
List of tables xv
Preface xvii
Acknowledgements xviii
List of conference participants xix
Introduction
1
Richard Baldwin, Pertti Haaparanta and Jaakko Kiander
1 Resurgent European integration 1
2 European integration, regionalism and the global trading
system 5
3 Implications for current policies and institutions 8
4 Implications for the location of economic activity 15
5 Economic consequences ofm embership for entrants 21
6 Conclusions 21
PART ONE: THEORETICAL ISSUES
2 A domino theory of regionalism 25
Richard E. Baldwin
1 Introduction 25
2 Facts, the standard explanation and an alternative 25
3 The basic model 36
4 The '1992' programme and the domino effect
44
5 S ary and conclusions 45
Dumiscussm ion 48
Thorvaldur Gylfa son
ix
x Contents
1 Demand for EU membership 48
2 Supply of membership 49
3 Dynamics 51
4 Bargaining 53
3 Customs unions, regional trading blocs and welfare 54
Hakan Nordstrom
1 Introduction 54
2 The model 57
3 Customs union in a world without regions 60
4 Regional trading blocs 67
5 Conclusions 75
Discussion 78
Ilkka Kajaste
4 Consumer services and economic integration 80
Pertti Haaparanta and Tiina Heikkinen
1 Introduction 80
2 Model I: do we still get bananas in Lapland? 82
3 Service production and entry by foreign firms 89
4 Regional impacts of integration 94
5 Conclusions 98
Appendix: derivation of (28) 100
Discussion 105
Bernard Hoekman
PART TWO: POLICY ISSUES
5 Voting power and control in the EU: the impact of the EFTA
entrants 113
Mika Widgren
1 Introduction 113
2 Measuring the national influence in the EU 114
3 The distribution of voting power 123
4 Decision making control 128
5 Policy change 130
6 Conclusions 137
